LONDON, Sept 26: Gold drifted lower on Friday, marking its fourth day of losses, but remained range-bound as uncertainty over the US bailout plan to rescue the banking system kept investors on the sidelines. Platinum tumbled almost 4 per cent and palladium dropped 2.4 per cent as data showing a decline in car sales higlighted poor demand prospects for the metal, widely used as a component in automotive catalytic converters.

Spot gold was down at $870.90/ 872.90 per ounce by 1001 GMT, a drop of $4.8, or 0.55 per cent, compared with the previous nominal close of $875.70. Earlier, it fell as low as $866.20 an ounce.

The main force today is the dollar, analyst Stephen Briggs at RBS said. The dollar is strong, but the question is; is it going to stay strong? Everything’s depended on the package in the United States. The yen jumped by more than 1 percent against the dollar as

risk aversion grew, after negotiations on the $700 billion US financial crisis bailout stalled and following the collapse of Washington Mutual, the biggest ever U.S. bank failure.

US congressional leaders will try again on Friday to save the plan. Democratic Rep. Barney Frank said negotiations would continue but there was no sign Republicans in the House of Representatives would take part.

Everything’s just marking time this morning, said Simon Weeks, managing director of precious metals at the Bank of Nova Scotia. People are waiting to see whether the US lawmakers will reach any conclusions ... and if they don’t we could see gold rising up again.”

Gold has gained about 20 per cent since Sept. 11 as safe-haven demand has heightened after the collapse in the share price of Lehman Brothers raised questions about the stability of the US and global financial sector.

However, analysts said the near-term technical trend weakened slightly after the cash price dipped below the five-day moving average of around $884.

Resistance around the 200-day moving average ($894.80) caused gold to stall yesterday and the weaker close dented the metals technical outlook, said analyst James Moore at Thebulliondesk.com Traders will also be waiting to hear how much gold has been sold so far by the European central banks as Friday marks the end of the fourth year of the Central Bank Gold Agreement.

In March 2004, 15 European central banks renewed a 1999 pact to limit their sales over a five-year period to 2,500 tons, with annual sales limited to 500 tons, up from 2,000 tons in the first agreement.

Platinum dropped 3.6 per cent, dragged down by weak demand prospects after Thursday’s data showed that global output at Toyota -- the largest automaker in Japan -- declined by 17 per cent in August.

The data suggests the demand from the autocatalyst sector -- the major use for platinum and palladium -- is going to be very very soft, Briggs at RBS said.

The metal fell as low as $1,127.50 an ounce and was last at $1,135/1,155 an ounce, down from the nominal close on Thursday of $1,172.50.

Spot silver was at $13.10/13.18 versus the nominal close of

$13.16, while spot palladium was at $228.50/$238.50 versus the nominal close of $234.---Reuters